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Home > Markets and Payments > Sterling Monetary Framework

Sterling Monetary Framework

The Bank's operations in the sterling money markets have two objectives, stemming from its monetary policy and financial stability responsibilities - to implement the Monetary Policy Committee's decisions in order to meet the inflation target; and to reduce the cost of disruption to the liquidity and payment services supplied by banks to the UK economy. These facilities are set out in part 2 of the 'Red Book':

Part 2 - The operations currently used in the Sterling Monetary Framework 

When Bank Rate was reduced close to zero in March 2009, the MPC's instrument of monetary policy shifted towards the quantity of money provided rather than the price at which the Bank lends or borrows money. This resulted in a number of changes to the Sterling Monetary Framework (SMF) detailed in the document below:

Market Notice: Sterling Monetary Framework
Effective 6 August 2009

The table in the document below summarises the operations currently undertaken by the Bank, including some of the operational parameters:

Summary of current Bank of England's operations in the sterling money markets

The Bank reviews its published framework for implementing monetary policy and providing liquidity insurance on an annual basis. The SMF Annual Report is the output of this review process and draws on the views of internal and external stakeholders to identify areas where the SMF works well, and areas where it might be improved.

Sterling Monetary Framework: Annual Report 2015-16

Sterling Monetary Framework: Annual Report 2014-15

Sterling Monetary Framework: Annual Report 2013-14

Latest information

30 June 2016

Developments in the Bank's approach to liquidity insurance

Latest SMF Operational Announcements

Number of SMF participants